Companies Lie. Some Get Away With It.

Stephen L. Carter is a Bloomberg View columnist. He is a professor of law at Yale University and was a clerk to U.S. Supreme Court Justice Thurgood Marshall. His novels include “The Emperor of Ocean Park” and “Back Channel,” and his nonfiction includes “Civility” and “Integrity.” Read More.

Why is it wrong for Volkswagen to lie (if it did lie) about whether its cars meet emission standards, but uncontroversial for HBO to lie (if it is lying) about whether Jon Snow is dead?

Everyone knows what Volkswagen is accused of. If you’re puzzled by the reference to Jon Snow, we’ll get to him in a minute. But first, let me tell a brief story.

Some years ago, at a business ethics seminar, I heard a retired businessman -- let’s call him Ed the Executive -- explain how a large corporation had once tasked him with shutting down a major division, but had also instructed him to deny that he was there for that purpose. If asked by anyone -- workers, suppliers, customers -- whether the division would close, he was to say no. Not refuse to comment. Actually lie.

Ed's tale spurred consternation among the other attendees, some of whom excoriated him, some of whom defended him. Ed insisted that he’d done the right thing. Of course the plan eventually leaked, but had it leaked sooner, he said, both upstream suppliers and downstream buyers would have fled. The employees, Ed argued, would have been hurt the most.

This memory was spurred by the Volkswagen scandal: It occurs to me that there are businesses we actually expect to lie to us, whose revenue is enhanced when they don’t tell their customers the truth.

Let’s start with entertainment. You may not know or care who Jon Snow is, but millions of aficionados know him as the beloved character portrayed by the actor Kit Harington on “Game of Thrones.” (Fans: If you’re not caught up, the rest of the paragraph contains spoilers you’ve probably heard about anyway.) In last season’s final episode, Jon was slain. Indubitably dead. Harington himself has repeatedly denied that he is returning for season six. Yet viewers don’t believe it. Purported evidence of his return is posted online constantly. Some critics even speculate that Harington has been ordered to lie -- that the obligation to deny his return might be written into his contract --to pique fan interest for the upcoming season. Nobody seems to think the claims, if true, show some ethical lapse on the part of the producers.

Then there’s sports. Lying is baked into sports, and not only do we forgive it -- we demand it. Consider football. Ron the Receiver drops the ball, but the officials have a bad view and rule the pass a completion. If Ron’s team hurries to run the next play before the opponent can look at the video to decide whether to challenge the call, the announcers don’t condemn the obvious lie -- they applaud the heads-up play.

Don’t get me wrong. I’m not proposing some deep conclusion about our society’s attitude toward lies. Certainly I don’t want to suggest that the football player who fools the referee is the moral equivalent of the engineer who fakes the emissions test.

On the other hand, I’m not entirely persuaded that the difference in our visceral responses to the two cases can be explained entirely by an implicit ranking of the importance of various activities. Polluting the air may be worse than cheating at sports, but I don’t know if that’s the reason we’re angry about the first and (if it’s our team) happy about the second.

The answer, I think, is that not every company’s reputational capital is dependent on whether it tells the truth -- or not in the same way. We’d be furious if our favorite football team cheated us on the tickets, but we don’t mind if the same team cheats to win.

A longtime colleague of mine used to say that we can’t tell whether breaking the rules is wrong unless we know “the rules about the rules.” Sometimes we have to follow the rules; sometimes we don’t. If we walk into an auto showroom and Molly the Manager lies about her reserve price for the model we want, we’re not even surprised. But if Molly lies about gas mileage, we’re furious.

The philosopher Seana Valentine Shiffrin uses the term “epistemic suspended context” to refer to a situation in which we are deprived of any expectation that the person speaking will tell the truth. This doesn’t mean we know the speaker is lying -- only that we know she might be.

Shiffrin’s examples include fiction and stage plays. But it’s easy to see how sports would fit. And, as she points out, such contexts are not necessarily reciprocal. We don’t expect Ron the Receiver to tell the referee the truth. We do expect the referee to tell Ron the truth.

It’s reasonable to argue that markets for goods and services are places where we ought not to need to suspend our expectations. The death of caveat emptor leads us to rely in a general way upon the truth of claims asserted in advertising. (Even when we shouldn’t.) This reliance in turn reduces the costs of doing business, for companies and consumers alike.

So now we’ve successfully distinguished football players from Volkswagen. But what about Ed, who lied about plans to close the division? Putting aside legal issues, it seems to me that his defenders had the ethics of the situation inverted. Suppliers, customers and employees all would reasonably expect him to tell the truth. They’d adjust their expectations accordingly. Ed told the seminar that he'd done the right thing. But imagine the employee who forwent another opportunity because she thought the division would stay open, and you can see how the costs of Ed's lie were borne by those he lied to.

This leaves us with Kit Harington. If indeed the producers of “Game of Thrones” require the actor to lie about Jon Snow’s return, is his conduct any different from the conduct of Ed the Executive? After all, in both cases the purpose of the lie would be to maximize profit. Are the cases therefore the same?

I suppose they might be -- unless, of course, Harington’s denials don’t count as lies. Shiffrin, like many philosophers, argues that a statement can’t be a lie if nobody believes it. We believed Volkswagen. And that's where things get eerie. In the midst of so many contexts where we expect people sometimes to lie -- sports, entertainment, certainly politics -- the one place to which we run for truth is private corporations. I can't be the only person who finds that disturbing.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Stephen L. Carter is a Bloomberg View columnist. He is a professor of law at Yale University and was a clerk to U.S. Supreme Court Justice Thurgood Marshall. His novels include “The Emperor of Ocean Park” and “Back Channel,” and his nonfiction includes “Civility” and “Integrity.” Read more